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H&M trims store opening plans as shoppers opt to buy online

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H&M has cut the number of new stores it expects to open in its current full-year as its customers opt to make more of their purchases online. The Swedish fast fashion retailer now expects to open around 130 new stores this year – 45 fewer than previously expected.

The update comes as H&M publishes half-year figures that show online sales grew by 27% in Swedish krona, and by 20% in local currencies. In the six months to May 31 2019, total group net sales grew by 11% to SEK 57.5bn (£4.8bn) (or 6% in local currencies). Profit after one-off costs and before tax came to SEK 5.9bn (£0.49bn), down slightly from SEK 6bn (£0.5bn) last time. 

H&M chief executive Karl-Johan Persson said: “By continuing to integrate our physical and digital channels we are making the shopping experience inspiring, easy and convenient for customers wherever we meet them. This and other extensive investments are driving costs in the short term. For example, our new online platform and our new logistics systems have not yet achieved full efficiency but for customers have resulted in improvements such as faster and more flexible deliveries and a more seamless shopping experience. We have also increased the value for our customers through further investments in the customer offering so that we offer the best combination of fashion, quality, price and sustainability.”

H&M Group, whose brands include H&M, an Elite retailer in IRUK Top500 research, as well as Cos, & Other Stories, and Afound, is now prioritising the integration of online and physical stores and improvements to online delivery options and payments. It will continue to develop new store concepts as well. Advanced data analytics and artificial intelligence are being introduced as part of work to make the supply chain faster and more efficient.

The retailer has opened online in Mexico and will launch online via franchise in Thailand, Indonesia and Egypt. It will also sell via third-party marketplaces, launching H&M on Myntra in India and & Other Stories on Tmall in China.

Persson added: “Our transformation work in response to the rapid shift in fashion retail is continuing at full speed. While the costs of this have held back profitability in the short term, we remain convinced that our focus on meeting customers’ increased expectations will contribute to a gradual increase in profitability and to long-term positive development for the H&M group.”

In April H&M introduced new transparency filters that show where and how its clothing was made, enabling customers to make sustainability choices. It has also developed its digital features and has expanded its customer loyalty programme – it now has more than 43m members.

Commenting, Kate Ormrod, lead retail analyst at data and analytics company GlobalData, said the figures showed no unexpected roadblocks that might hinder its transformation plan, although profitability remained a sticking point. That would be tested in the second half of the year. She welcomed plans to “invest in online as consumer spending shifts to this channel.”

“Having been a laggard for so long, H&M’s investment continues apace as the retailer is still yet to fully harness the opportunities that lie within online. While H&M focuses on rolling our services such as click and collect and in-store returns to other markets, it must not neglect other must-have features and fulfilment options that would elevate its online offer in the UK, such as a delivery saver scheme. Whilst it now plans fewer store openings, minimising costs, the new strategy puts pressure on H&M’s existing stores and online operations to deliver.”

Image: InternetRetailing Media/Paul Skeldon

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